The quest to determine the ROI of marketing investments is at an all time high. The demand usually comes from the Executive level in the form of budget modifications and a higher level of accountability is expected from marketing initiatives. There is no question this has a bearing on the massive shift from offline advertising to Online advertising. Why? It’s easier to track Online results through Website tracking, which comes in many different forms and luckily most are accurate nowadays. But, just having tracking is not enough, it’s the proper interpretation of this data that will help you to determine your ROI.
Just remember, when an Executive demands to see a marketing ROI analysis they are not saying “We need to cut our costs.” Quite the opposite is true, what they are saying is “We need to invest wisely, spend less on what doesn’t work and more on what does work”.
The Holy Grail of any marketing endeavor is to determine an accurate ROI, but unfortunately the perception of Website tracking tools has actually caused confusion as to how realistic this goal is to achieve.
Whether the marketing medium is print, emails, or Web marketing, the absolute best way to determine your ROI is to ask every single person who contacts you EXACTLY how they found you. Generic answers like “Your Website” or “The Internet” fall far short of satisfactory. These responses need to be followed up with “How did you find our Website?” or “How did you find us on the Web”. Once a satisfactory response is supplied, it is important to track this potential buyer throughout the lifecyle of your interaction with them. The reason for this is that a customer may very well place a small order with you the first time they buy, but as time goes on those orders will multiply and increase and a ROI is contingent upon the value in a customer, not the value in one sale.
I realize that tracking this closely has a lot to do with the volume of contacts you receive, but there are plenty of ways to log this information nowadays. Everything from a simple spreadsheet to a sofisticated CRM system can be implemented. The key point to keep in mind here is that the responsibility of tracking to this extent rests solely on your shoulders–this level of detail can only be gathered from internal resources (NOTE: ThomasNet offers services to link your E-Commerce Website to your ERP system). While this may require some extra work on your part, it is well worth it when it comes time to set your marketing strategy and budget moving forward.
There are still variations within the level of data captured between Website tracking tools and even more dropoff in the level of accurately interpreting this data. Below is a short video demonmstration of the free Website tracking software offered by ThomasNet calledWebTraxs. While this tool alone is very valuable, the real value is in the fact that it comes with a ThomasNet Internet Marketing Specialist to help you interpret the data with you.
My recommendation when undertaking a ROI analysis is to first establish what your expectations are for each element of your marketing strategy. In pre-Internet days determining the ROI was much simpler because marketing was more emotional than statistical. “I have to be in that magazine or at that trade show because my competitors are there and if I’m not there people will think I don’t exist.” With the Internet, your Website is confirmation that you exist, but does it reach the audience of buyers you want to be in front of when they are searching the Web for your products?
Once your expectations are set and the data is gathered you need to make sure you are tracking the results as they relate to those expectations.
For example: I have learned from launching this blog and my own marketing strategy that every time I am ‘clicked’ that’s one more person who knows more about me and my services and to me that is success. It’s Marketing 101 to realize that as the volume of activity increases will be more business opportunities that come from this endeavor.
Your expectations should also be set with the timing of your sales cycle as a factor. If the typical sales cycle from first contact to sending a product/invoice is 9 months then it is not realistic to expect a large ROI in the first year of your advertising program. Give it two years and adjust your ROI to reflect this.
Some traditional stats still hold true. Very few companies advertised in a magazine solely based on its circulation statistics, the target audience of readers was a bigger factor. The same holds true for your Website. You may get 100 visitors from search engines, but how did they find you? Were they looking for your products or did they stumble upon you in error?
Lastly, it is important to keep in mind that the preferred method of contact is still the telephone which brings me back to my original point that ALL contacts should be tracked including emails and phone calls. If you sell highly engineered solutions is it reasonable to expect someone to send you an email asking you for an order? Or would you expect that buyer to call you and discuss the project at hand and qualify you as a potential supplier?
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